Strategy, structure and management of the MNE
1. Nature, types and roles of MNE
What is a multinational enterprise?
• “A multinational enterprise (MNE) is a business firm that sets strategy and manages
operations for the development and utilization of income-generating assets in more
than one country in the pursuit of profits over time.”
• Multinational enterprise (MNE) - a business firm that has productive activities in two
or more countries, managed from a home base.
Core characteristics
• Home base – host country
• “Liability of foreignness”
• Geographical spread of own operations and inter-organizational relations
• Multimarket contact
• HQ-subsidiaries
• Centralized control vs. local management (internal pressures)
• Local adaptation vs. global scale (external pressures)
The old MNE (pre-60s)
• A loose federation of national subsidiaries: Global presence without global
integration.
• High autonomy: Subsidiaries operated as stand-alone companies serving local
markets, did not communicate or share knowledge with each other (no lateral
linkages).
• Production, marketing, and product adaptation were fully local.
• Limited coordination from the HQ (mostly budget control and reporting).
• MNEs were not global networks — they were collections of national units.
,The globalization cycle and MNE forms:
Single ‘normative’ types of MNEs in globalization contexts:
• Heterarchy (Hedlund)
o Multicentral, mix of different centers, brain metaphor, holographic
orientation, lateral communication, indirect and normative coordination
mechanisms, coalitions with other organizations, etc.
• Diversified Multinational Corporation (Doz & Prahalad)
o Characterized by multidimensionality and heterogeneity which lead to seven
distinct characteristics: (1) structural undeterminacy, (2) internal
differentiation, (3) integrative optimization, (4) information intensity, (5) latent
linkages, (6) networked organization/ fuzzy boundaries, (7) learning and
continuity
• Horizontal organization (White & Poynter)
o Lateral decision processes, horizontal network (as opposed to hierarchy),
common ground for decision making (values and norms)
,White and Poynter’s Horizontal organization in comparison:
Classical typologies of MNE:
• Top management attitudes and management philosophy:
o EP(R)G Model
• Strategic orientation as response to industry forces:
o International, local, global, transnational (“glocal”)
EP(R)G model:
, EP(R)G Model: Geocentrism forces:
1. Nature, types and roles of MNE
What is a multinational enterprise?
• “A multinational enterprise (MNE) is a business firm that sets strategy and manages
operations for the development and utilization of income-generating assets in more
than one country in the pursuit of profits over time.”
• Multinational enterprise (MNE) - a business firm that has productive activities in two
or more countries, managed from a home base.
Core characteristics
• Home base – host country
• “Liability of foreignness”
• Geographical spread of own operations and inter-organizational relations
• Multimarket contact
• HQ-subsidiaries
• Centralized control vs. local management (internal pressures)
• Local adaptation vs. global scale (external pressures)
The old MNE (pre-60s)
• A loose federation of national subsidiaries: Global presence without global
integration.
• High autonomy: Subsidiaries operated as stand-alone companies serving local
markets, did not communicate or share knowledge with each other (no lateral
linkages).
• Production, marketing, and product adaptation were fully local.
• Limited coordination from the HQ (mostly budget control and reporting).
• MNEs were not global networks — they were collections of national units.
,The globalization cycle and MNE forms:
Single ‘normative’ types of MNEs in globalization contexts:
• Heterarchy (Hedlund)
o Multicentral, mix of different centers, brain metaphor, holographic
orientation, lateral communication, indirect and normative coordination
mechanisms, coalitions with other organizations, etc.
• Diversified Multinational Corporation (Doz & Prahalad)
o Characterized by multidimensionality and heterogeneity which lead to seven
distinct characteristics: (1) structural undeterminacy, (2) internal
differentiation, (3) integrative optimization, (4) information intensity, (5) latent
linkages, (6) networked organization/ fuzzy boundaries, (7) learning and
continuity
• Horizontal organization (White & Poynter)
o Lateral decision processes, horizontal network (as opposed to hierarchy),
common ground for decision making (values and norms)
,White and Poynter’s Horizontal organization in comparison:
Classical typologies of MNE:
• Top management attitudes and management philosophy:
o EP(R)G Model
• Strategic orientation as response to industry forces:
o International, local, global, transnational (“glocal”)
EP(R)G model:
, EP(R)G Model: Geocentrism forces:
